This policy paper studies external economic differentiation – that is, the various forms of third-country access to the European Single Market. It analyses their accountability mechanisms and evaluates their effectiveness – defined as the capacity to foster long-term economic integration and cooperation – as well as their potential effects on the EU’s political unity. The paper identifies three key problems with existing external economic differentiation: overly static agreements, complex and fragmented institutional frameworks, and imbalances between rights and obligations in relation to the Single Market. Based on these findings, the policy paper highlights the importance of continuous market homogeneity for the effectiveness of external economic differentiation. Agreements that allow for the dynamic integration of the evolving EU acquis, that include mechanisms for its uniform interpretation and implementation and that are based on unified, simple and clear governance frameworks better achieve such homogeneity. In addition, agreements that are adaptable to evolving objectives and tailored to the size of individual third countries are more effective. The analysis of accountability mechanisms shows room for improvement in their deepening and extension to additional third countries. In terms of political unity, centrifugal forces can be contained through an adequate balance of rights and obligations in Single Market access.

INDEX

Introduction
1. External differentiation in Single Market access
2. Challenges to the effectiveness of external economic differentiation
3. Restricted accountability mechanisms in external economic differentiation
4. EU political unity not under threat from external economic differentiation

Conclusion
Annex

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